Consumer Price Index

Consumer Price Index News Release

FOR TECHNICAL INFORMATION:
Stephen B. Reed (202) 691-7000 USDL-08-1827
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INTERNET ADDRESS: http://www.bls.gov/cpi/ Tuesday, December 16, 2008
CONSUMER PRICE INDEX: NOVEMBER 2008
The Consumer Price Index for All Urban Consumers (CPI-U) decreased
1.9 percent in November, before seasonal adjustment, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. The November
level of 212.425 (1982-84=100) was 1.1 percent higher than in November
2007.
The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) decreased 2.3 percent in November, prior to seasonal adjustment.
The November level of 207.296 (1982-84=100) was 0.7 percent higher than in
November 2007.
The Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
decreased 2.0 percent in November on a not seasonally adjusted basis. The
November level of 122.284 (December 1999=100) was 0.7 percent higher than
in November 2007. Please note that the indexes for the post-2006 period
are subject to revision.
CPI for All Urban Consumers (CPI-U)
On a seasonally adjusted basis, the CPI-U decreased 1.7 percent in
November, the second consecutive record decrease. For the 12 month period
ending in November the CPI was up 1.1 percent, compared to 5.6 percent for
the twelve months ending July of this year. Falling energy prices,
particularly gasoline, drove the decline in the overall index. Excluding
energy, the index was virtually unchanged.
The energy index fell 17.0 percent in November. The decrease was
about twice the October decline and energy prices are now 32.4 percent
below the July peak earlier this year. The gasoline index fell 29.5
percent in November and gas prices are now 47.0 percent below their July
peak. The natural gas index also (cont.)
Table A. Percent changes in CPI for All Urban Consumers (CPI-U)
Seasonally adjusted
Expenditure Compound
Category Changes from preceding month annual Un-
rate adjusted
3-mos. 12-mos.
May June July Aug. Sep. Oct. Nov. ended ended
2008 2008 2008 2008 2008 2008 2008 Nov. 2008 Nov. 2008
All items.......... .6 1.1 .8 -.1 .0 -1.0 -1.7 -10.2 1.1
Food and beverages .3 .7 .9 .6 .6 .3 .2 4.1 5.9
Housing........... .5 .5 .6 -.1 -.1 .0 -.1 -1.0 2.7
Apparel........... -.3 .1 1.2 .5 -.1 -1.0 .3 -3.3 .0
Transportation.... 2.0 3.8 1.7 -1.5 -.6 -5.4 -9.8 -48.1 -8.9
Medical care...... .2 .2 .1 .2 .3 .2 .2 2.9 2.7
Recreation........ .1 .1 .4 .5 .2 .1 .0 1.2 2.0
Education and
communication.. .4 .5 .5 .2 .1 .2 .2 2.1 3.6
Other goods and
services....... .4 .4 .4 .2 .2 .3 .0 1.9 3.8
Special indexes:
Energy............ 4.4 6.6 4.0 -3.1 -1.9 -8.6 -17.0 -69.3 -13.3
Food.............. .3 .8 .9 .6 .6 .3 .2 4.0 6.0
All items less
food and energy .2 .3 .3 .2 .1 -.1 .0 .4 2.0
declined in November, the fourth consecutive decrease. After seasonal
adjustment, the index was down 21.7 percent from July to November.
Food prices increased 0.2 percent November following a 0.3 percent
rise in October. Excluding food and energy, the CPI was virtually
unchanged in November and is up 2.0 percent since November 2007.
Continuing declines in the indexes for new and used motor vehicles,
lodging away from home, airline fares and some technology-related
commodities offset small increases in a variety of other service and
commodity items.
For the first eleven months of 2008, the all items index rose at a
seasonally adjusted annualized rate (SAAR) of 0.7 percent after increasing
4.1 percent in all of 2007. The energy index, which rose 17.4 percent
during 2007, has declined at a SAAR of 16.0 percent through the first
eleven months of 2008. The food index has risen at a 6.5 percent SAAR for
the first eleven months of 2008 after increasing 4.9 percent in 2007.
Excluding food and energy, the CPI has advanced at a 1.9 percent SAAR so
far in 2008 after rising 2.4 percent in 2007.
The food and beverages index rose 0.2 percent in November after
increasing 0.3 percent in October. The food at home index was unchanged
in November. The index for meat, poultry, fish and eggs turned down in
November for the first time since February, falling 0.7 percent as the
indexes for beef, fish, and eggs all declined. The fruits and vegetables
index also declined for the third month in a row, with the decrease being
driven by a decline in the fresh fruits index. These declines were offset
by increases in the other grocery store food groups, including a 0.6
percent advance in the other food at home index and a 0.4 percent increase
in the index for dairy and related products. Compared to November 2007,
the food at home index was up 7.0 percent, with the largest increase in
the cereal and bakery products index at 12.0 percent and the smallest
increase in dairy and related products at 3.5 percent. The food away from
home index rose 0.3 percent in November and the index for alcoholic
beverages increased 0.5 percent.
The housing index fell 0.1 percent in November after being virtually
unchanged in October. The index for shelter, virtually unchanged in
October, rose 0.2 percent in November. Within shelter, the indexes for
rent and owners' equivalent rent both rose 0.3 percent, while the index
for lodging away from home fell 1.1 percent in November, its second
straight significant decline. The index for household energy, down 0.9
percent in October, fell 2.0 percent in November. Both the fuel oil and
natural gas indexes posted substantial declines for the fourth consecutive
month; the fuel oil index decreased 14.6 percent in November and the
natural gas index fell 5.2 percent. The electricity index rose for the
second straight month, increasing 0.6 percent in November. The index for
household furnishings and operations, virtually unchanged in October, fell
0.2 percent in November.
The transportation index declined 9.8 percent in November after
falling 5.4 percent in October as several major components of the index
continued to decline. The index for motor fuel fell 29.0 percent in
November after decreasing 13.9 percent in October and is 28.6 percent
lower than in November 2007. New and used motor vehicles, down 0.7
percent in October, fell 0.9 percent in November. The index for used cars
and trucks declined 2.2 percent in November and the new vehicles index
fell 0.6 percent and has declined 2.9 percent since November 2007. The
index for public transportation, down 3.3 percent in October, fell 2.7
percent in November, with the airline fare index declining 4.0 percent.
It was the third consecutive decrease in the airline fare index, but it is
still up 4.0 percent since November 2007.
The apparel index turned up in November, rising 0.3 percent after
declining 1.0 percent in October. (Before seasonal adjustment, apparel
prices declined 0.8 percent in November and are virtually unchanged from
their November 2007 level.)
The index for medical care rose 0.2 percent in November, the same
increase as in October, and was 2.7 percent higher than in November 2007.
The medical care commodities index rose 0.6 percent in November following
a 0.2 percent increase in October as the index for prescription drugs rose
0.6 percent in November after increasing 0.3 percent in each of the two
prior months. The index for medical care services rose 0.1 percent in
November after rising 0.2 percent in October. Within medical care
services, the physicians' services index rose 0.3 percent after increasing
0.1 percent in October and the index for hospital and related services was
virtually unchanged in November after advancing 0.4 percent in October.
After rising 0.1 percent in October, the index for recreation was
virtually unchanged in November. The indexes for video and audio and for
toys decreased in November while the indexes for pets, pet products and
services, for sporting goods, and for admissions all posted increases.
The index for education and communication rose 0.2 percent in
November, the same increase as the previous month. The index for
education repeated its October increase of 0.4 percent while the
communication index rose 0.1 percent after being virtually unchanged in
October. Within communication, the telephone services index rose 0.1
percent while the index for information technology, hardware and services
declined 0.1 percent.
The other goods and services index was virtually unchanged in
November after rising 0.3 percent in October. The indexes for tobacco and
smoking products and for personal care were both virtually unchanged in
November after posting respective increases of 0.4 percent and 0.2 percent
in October.
CPI for Urban Wage Earners and Clerical Workers (CPI-W)
On a seasonally adjusted basis, the CPI for Urban Wage Earners and
Clerical Workers decreased 2.1 percent in November.
Table B. Percent changes in CPI for Urban Wage Earners and
Clerical Workers (CPI-W)
Seasonally adjusted
Expenditure Compound
Category Changes from preceding month annual Un-
rate adjusted
3-mos. 12-mos.
May June July Aug. Sep. Oct. Nov. ended ended
2008 2008 2008 2008 2008 2008 2008 Nov. 2008 Nov. 2008
All items.......... .7 1.2 .9 -.2 -.1 -1.2 -2.1 -12.9 .7
Food and beverages .3 .8 .9 .6 .6 .3 .2 4.2 6.0
Housing........... .5 .5 .7 .0 -.2 .0 -.1 -.8 3.1
Apparel........... -.2 .0 .8 1.0 .0 -1.2 .2 -3.9 .2
Transportation.... 2.1 4.0 1.8 -1.7 -.7 -6.0 -10.9 -52.1 -10.4
Medical care...... .1 .2 .1 .3 .3 .1 .2 2.7 2.7
Recreation........ .0 .2 .4 .5 .2 .0 -.1 .8 1.9
Education and
communication.. .3 .5 .5 .2 .0 .2 .2 1.6 3.4
Other goods and
services....... .5 .6 .5 .2 .2 .3 .1 2.4 4.4
Special indexes:
Energy............ 4.5 6.8 4.0 -3.2 -1.7 -9.0 -17.8 -70.8 -14.3
Food.............. .3 .8 .9 .6 .6 .3 .2 4.1 6.2
All items less
food and energy .2 .3 .3 .2 .1 -.1 .0 .1 2.0
Consumer Price Index data for December are scheduled for release on
Friday, January 16, 2009, at 8:30 A.M. (EST).
Facilities for Sensory Impaired
Information from this release will be made available to sensory
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Brief Explanation of the CPI
The Consumer Price Index (CPI) is a measure of the average change in
prices over time of goods and services purchased by households. The
Bureau of Labor Statistics publishes CPIs for two population groups: (1)
the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which covers
households of wage earners and clerical workers that comprise
approximately 32 percent of the total population and (2) the CPI for All
Urban Consumers (CPI-U) and the Chained CPI for All Urban Consumers (C-CPI-
U), which cover approximately 87 percent of the total population and
include in addition to wage earners and clerical worker households, groups
such as professional, managerial, and technical workers, the self-
employed, short-term workers, the unemployed, and retirees and others not
in the labor force.
The CPIs are based on prices of food, clothing, shelter, and fuels,
transportation fares, charges for doctors' and dentists' services, drugs,
and other goods and services that people buy for day-to-day living.
Prices are collected in 87 urban areas across the country from about
50,000 housing units and approximately 23,000 retail establishments-
department stores, supermarkets, hospitals, filling stations, and other
types of stores and service establishments. All taxes directly associated
with the purchase and use of items are included in the index. Prices of
fuels and a few other items are obtained every month in all 87 locations.
Prices of most other commodities and services are collected every month in
the three largest geographic areas and every other month in other areas.
Prices of most goods and services are obtained by personal visits or
telephone calls of the Bureau's trained representatives.
In calculating the index, price changes for the various items in each
location are averaged together with weights, which represent their
importance in the spending of the appropriate population group. Local
data are then combined to obtain a U.S. city average. For the CPI-U and
CPI-W separate indexes are also published by size of city, by region of
the country, for cross-classifications of regions and population-size
classes, and for 27 local areas. Area indexes do not measure differences
in the level of prices among cities; they only measure the average change
in prices for each area since the base period. For the C-CPI-U data are
issued only at the national level. It is important to note that the CPI-U
and CPI-W are considered final when released, but the C-CPI-U is issued in
preliminary form and subject to two annual revisions.
The index measures price change from a designed reference date. For
the CPI-U and the CPI-W the reference base is 1982-84 equals 100.0. The
reference base for the C-CPI-U is December 1999 equals 100.
An increase of 16.5 percent from the reference base, for example, is shown
as 116.5. This change can also be expressed in dollars as follows: the
price of a base period market basket of goods and services in the CPI has
risen from $10 in 1982-84 to $11.65.
For further details visit the CPI home page on the Internet at
http://www.bls.gov/cpi/ or contact our CPI Information and Analysis
Section on (202) 691-7000.
Note on Sampling Error in the Consumer Price Index
The CPI is a statistical estimate that is subject to sampling error
because it is based upon a sample of retail prices and not the complete
universe of all prices. BLS calculates and publishes estimates of the 1-
month, 2-month, 6-month and 12-month percent change standard errors
annually, for the CPI-U. These standard error estimates can be used to
construct confidence intervals for hypothesis testing. For example, the
estimated standard error of the 1 month percent change is 0.06 percent for
the U.S. All Items Consumer Price Index. This means that if we repeatedly
sample from the universe of all retail prices using the same methodology,
and estimate a percentage change for each sample, then 95% of these
estimates would be within 0.12 percent of the 1 month percentage change
based on all retail prices. For a 1-month change of 0.2 percent in the
All Items CPI for All Urban Consumers, we are 95 percent confident that
the actual percent change based on all retail prices would fall between
0.08 and 0.32 percent. For the latest data, including information on how
to use the estimates of standard error, see "Variance Estimates for
Changes in the Consumer Price Index, January 2005- December 2005" in the
CPI Detailed Report, February 2006. These data are available on the CPI
home page (http://www.bls.gov/cpi), using the following link
http://www.bls.gov/cpi/cpivar2006.pdf
Calculating Index Changes
Movements of the indexes from one month to another are usually
expressed as percent changes rather than changes in index points, because
index point changes are affected by the level of the index in relation to
its
base period while percent changes are not. The example below illustrates
the computation of index point and percent changes.
Percent changes for 3-month and 6-month periods are expressed as
annual rates and are computed according to the standard formula for
compound growth rates. These data indicate what the percent change would
be if the current rate were maintained for a 12-month period.
Index Point Change
CPI
202.416
Less previous index
201.800
Equals index point change
.616
Percent Change
Index point difference
.616
Divided by the previous index
201.800
Equals
0.003
Results multiplied by one hundred
0.003x100
Equals percent change
0.3
Regions Defined
The states in the four regions shown in Tables 3 and 6 are listed below.
The Northeast--Connecticut, Maine, Massachusetts, New Hampshire, New York,
New Jersey, Pennsylvania, Rhode Island, and Vermont.
The Midwest--Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota,
Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.
The South--Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky,
Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina,
Tennessee, Texas, Virginia, West Virginia, and the District of Columbia.
The West--Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana,
Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.
A Note on Seasonally Adjusted and Unadjusted Data
Because price data are used for different purposes by different
groups, the Bureau of Labor Statistics publishes seasonally adjusted as
well as unadjusted changes each month.
For analyzing general price trends in the economy, seasonally
adjusted changes are usually preferred since they eliminate the effect of
changes that normally occur at the same time and in about the same
magnitude every year--such as price movements resulting from changing
climatic conditions, production cycles, model changeovers, holidays, and
sales.
The unadjusted data are of primary interest to consumers concerned
about the prices they actually pay. Unadjusted data also are used
extensively for escalation purposes. Many collective bargaining contract
agreements and pension plans, for example, tie compensation changes to the
Consumer Price Index before adjustment for seasonal variation.
Seasonal factors used in computing the seasonally adjusted indexes
are derived by the X-12-ARIMA Seasonal Adjustment Method. Seasonally
adjusted indexes and seasonal factors are computed annually. Each year,
the last 5 years of seasonally adjusted data are revised. Data from
January 2003 through December 2007 were replaced in January 2008.
Exceptions to the usual revision schedule were: the updated seasonal data
at the end of 1977 replaced data from 1967 through 1977; and, in January
2002, dependently seasonally adjusted series were revised for January 1987-
December 2001 as a result of a change in the aggregation weights for
dependently adjusted series. For further information, please see
"Aggregation of Dependently Adjusted Seasonally Adjusted Series," in the
October 2001 issue of the CPI Detailed Report.
The seasonal movement of All items and 54 other aggregations is
derived by combining the seasonal movement of 73 selected components.
Each year the seasonal status of every series is reevaluated based upon
certain statistical criteria. If any of the 73 components change their
seasonal adjustment status from seasonally adjusted to not seasonally
adjusted, not seasonally adjusted data will be used in the aggregation of
the dependent series for the last 5 years, but the seasonally adjusted
indexes will be used before that period. Note: 48 of the 73 components
are seasonally adjusted for 2008.
Seasonally adjusted data, including the All items index levels, are
subject to revision for up to five years after their original release.
For this reason, BLS advises against the use of these data in escalation
agreements.
Effective with the calculation of the seasonal factors for 1990, the
Bureau of Labor Statistics has used an enhanced seasonal adjustment
procedure called Intervention Analysis Seasonal Adjustment for some CPI
series. Intervention Analysis Seasonal Adjustment allows for better
estimates of seasonally adjusted data. Extreme values and/or sharp
movements which might distort the seasonal pattern are estimated and
removed from the data prior to calculation of seasonal factors. Beginning
with the calculation of seasonal factors for 1996, X-12-ARIMA software was
used for Intervention Analysis Seasonal Adjustment.
For the seasonal factors introduced in January 2008, BLS adjusted 20
series using Intervention Analysis Seasonal Adjustment, including selected
food and beverage items, motor fuels, electricity and vehicles. For
example, this procedure was used for the Motor fuel series to offset the
effects of events such as damage to oil refineries from Hurricane Katrina.
For a complete list of Intervention Analysis Seasonal Adjustment
series and explanations, please refer to the article "Intervention
Analysis Seasonal Adjustment," located on our website at
http://www.bls.gov/cpi/cpisapage.htm.
For additional information on seasonal adjustment in the CPI, please
write to the Bureau of Labor Statistics, Division of Consumer Prices and
Price Indexes, Washington, DC 20212 or contact Jeff Wilson at (202) 691-
6968, or by e-mail at Wilson.Jeff@bls.gov. If you have general questions
about the CPI, please call our information staff at (202) 691-7000.